Trade and bank credit in a non-cooperative chain with a price-sensitive demand

Vincent Hovelaque, Jean-Laurent Viviani and Mohamed Ait Mansour

International Journal of Production Research, 2022, vol. 60, issue 5, 1553-1568

Abstract: The purpose of this article is to examine the impact of the working capital in the borrowing decision of a retailer. The proposed analysis is based on a model with a retailer, a supplier and a bank in a non-cooperative game with price-sensitive demand. The retailer, the supplier and the bank (if concerned) determine, respectively, the ordering quantity, the wholesale price and the interest rate. A Stackelberg game-theoretic approach is employed where the retailer is a follower and either the supplier or the bank is the leader. Some structural properties are first derived from the mathematical models. Then, some numerical simulations show that: (i) a trade credit guarantees the same profits for the retailer and the supplier as in the case where the retailer has sufficient cash holdings, (ii) there exist some situations where the retailer has a better profit with a borrow than with sufficient cash holdings, and (iii) borrowing decision depends on both retailer's and supplier's discount rate and the retailer's cash holdings.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2020.1866222 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Trade and bank credit in a non-cooperative chain with a price-sensitive demand (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:60:y:2022:i:5:p:1553-1568

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2020.1866222

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().